Human Resource Auditing

Purpose

• The purpose of a Human Resources audit is to assess the effectiveness of the Human Resources function to ensure regulatory compliance.

• To look for potentially serious problems (time bombs)

• To find areas needing improvement • To document processes for use in merger,

reorganization or inspection• To address compliance issues

In brief: to evaluate and improve your HR practices in:

• Staffing

• Compensation and Benefits

• Performance Management

• Employee Development

• Employee Relations

• Safety

• Reporting and Recordkeeping

Benefits

• Creat an HR business plan

• Streamline HR work processes

• Monitor compliance with established regulations and procedures

• Develop user-friendly HR systems

How

• Interview key staff • Review relevant documentation • Help you complete a comprehensive

questionnaire • Compile data a prepare and customized

written report • Make specific recommendations to

improve the efficiency and performance of your HR function

Data

• What do the written policies and procedures say?

• What do the HR managers say?

• What do the line managers say?

Examples of data

• Hiring statistics (acceptance rate, hiring rate, hiring projections)

• Turnover • Compensation and benefits philosophy and

practice • Exit interview summaries • Employee complaints (discrimination,

harassment, safety, other) • Promotion and advancement practices and

trends • Human Resources budget and expenditures

Interviews

• Perceptions of the company and its goals • Strengths and weaknesses of top management • Employee perceptions of the company and top

management • Relations with subordinates • Support of career goals for self and employees • Major Human Resources issues • Which Human Resources functions work well • Which Human Resources functions need

improvement

Conduct the Regulatory Compliance Audit

• Personnel files and record keeping (contain only job related information)

• Pay equality • Job descriptions (ADA compliance) • Health and safety• Equal opportunities and positive action • Forms (applications, internal forms, etc.) • Legal reporting• Policies and procedures

Recruitment

• How are candidates sourced?

• How are candidates selected?

• Are legal requirements met?

• Are the same processes used for all jobs, all locations?

• Are processes followed consistently?

Compensation and Benefits

• What are the different policy groups (e.g. management, clerical, union)?

• How is base pay policy set? • What grading/job evaluation systems are used? • Are there up-to-date job descriptions? • What variable pay practices are in place? • How are pay increments decided? • What is the benefits plan? • Are the same processes used for all jobs, all locations? • Are processes followed consistently?

Workforce Review

• Are there any critical skills shortages? • Are there any critical succession issues? • Is there anything unusual in the distribution of

worker age, gender etc.? • What workforce planning processes are used? • What succession planning processes are used? • Are the same processes used for all jobs, all

locations? • Are processes followed consistently?

Training and Development

•How much training is given?

•How is the training program managed?

•Are there any staff development programs?

•Are the same processes used for all jobs, all locations?

•Are processes followed consistently?

Industrial Relations

•What unions exist and what jobs are covered?

•What collective agreements are in place, when do they expire?

•How many grievances are there per year?

•Are there any outstanding grievances?

Legal

•Are processes in place to manage compliance issues for all relevant jurisdictions?

•Is there any outstanding litigation?

•Are the same processes used for all jobs, all locations?

•Are processes followed consistently?

HR Technology

•What technology is installed?

•How up-to-date is the technology?

•Is the data clean?

•Are there any important technology projects in progress?

Strategic HR

•Where does the most senior HR person report in to?

•How much interest does top management have in HR issues?

Some Other Audit Techniques to Consider

•Audit of corporate culture.

•Competency audit of HR staff.

•Metrics based audit using metrics such as those proposed by the Saratoga Institute.

•Audit of customer satisfaction with HR.

Any Questions?